Pharm Exec: Why do you think Big Pharma marketing execs may eventually end up as CEOs of biotech companies?
Israel: The emphasis of our activities is helping investors and boards of earlier stage companies identify key management. The needs
of a public company that has no marketed products are quite different from Merck's, for example. So typically, our clients
are companies that have drugs in development but have not yet reached registration. But that doesn't mean that they're any
less concerned about succession planning and having the right talent at the helm.
There's a fascinating thing going on right now. In the process of being engaged by both public and private companies to help
identify new leadership, the emphasis has shifted dramatically over the last few years. I would almost call it a new imperative:
Our venture capital clients have always thought it was best to attract CEOs who can raise money and drive R&D milestones.
But now, our clients seem to be strongly favoring commercial leaders—people that are likely to have come from the discipline
of a Big Pharma company and who have P&L experience—people who actually run businesses. They might not have been the CEO of
a major company, but they might head a business unit, such as the therapeutic area head for respiratory or oncology or cardiovascular.
The message here is that biotech companies have learned that they're better served by having business leaders who have proven
general management skills and strategic marketing backgrounds—not simply entrepreneurs who might have the ability to raise
money or inspire hope, etc. And there are many examples of this in the industry.
Why has this shift occurred?
Wall Street no longer values technology as much as it does products. Those analysts who cover public biotech companies
are more excited about where companies are in product development than they are about technology. So you can have a company
that has a great technology base, but if they don't have a product in Phase II development, Wall Street won't reward the company
by increasing the value of its stock price.
If products are valued over technology, it means that the premium for leadership is more toward people who are very product
oriented. And those people are the ones with management and marketing backgrounds.
At the same time, there are 1,400 or so biotech companies—maybe 400 public ones—with more of them moving from being R&D-driven
to commercially-focused entities that are close to reaching the marketplace. Since that's started to happen, these companies
are scratching their heads and saying, "Gee, we don't have anybody here who understands how to launch a product. We need to
bring on board commercial leadership, both on the board level and management level."
There's a new cadre of business people running biotech companies at earlier and earlier stages. This is not always going to
be the case, because there are many former heads of R&D, like Bill Koster at Neurogen, who go off and successfully run early
stage companies. But my view is that more and more, people with pure commercial backgrounds are going to be running early
stage biotech companies.
Can you give an example of someone in the industry today?
Paul Clark at Icos, formerly president of Abbott Pharmaceuticals. He's been at Icos four or five years, so it's been a while—he
may have been one of the first to fall into this trend. Paul was not an R&D guy, and he joined Icos before they got their
lead compound approved; it was very early. But I would argue that his commercial instincts helped the company be successful.